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A Positioning Analysis of Hotel Brands - Based on


Travel-Manager Perceptions
Chekitan S. Dev
Cornell University School of Hotel Administration, csd5@cornell.edu

Michael S. Morgan
Cornell University

Stowe Shoemaker
University of Nevada, Las Vegas

Follow this and additional works at: http://scholarship.sha.cornell.edu/articles


Part of the Hospitality Administration and Management Commons, Marketing Commons, and
the Tourism and Travel Commons

Recommended Citation
Dev, C. S., Morgan, M. S., & Shoemaker, S. (1995). A positioning analysis of hotel brands - Based on travel-manager perceptions.
Cornell Hotel and Restaurant Administration Quarterly, 36(6). 48-55. doi:10.1016/0010-8804(96)81003-2

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A Positioning Analysis of Hotel Brands - Based on Travel-Manager
Perceptions
Abstract
A hotel brands unique selling propositionthe argument it makes to convince travelers to book its hotels
instead of someone elses propertiesis known as its market position. The position comprises the bundle of
attributes that the hotel offers in an effort to meet guests wants and needs.

Keywords
hotel industry, market share, marketing, competitive strategy, branding

Disciplines
Hospitality Administration and Management | Marketing | Tourism and Travel

Comments
Required Publisher Statement
Cornell University. Reprinted with permission. All rights reserved.

This article or chapter is available at The Scholarly Commons: http://scholarship.sha.cornell.edu/articles/783


A Positioning
Analysis of
Hotel Brands- Hotels attempt to establish a unique market position in

an effort to boost market share. In the end, however,

Based on Travel-Manager Perceptions position is in the eye of the customer. Identifying that

position is an essential element in determining the

effectiveness of a hotels marketing strategy.


by Chekitan S. Dev,
Michael S. Morgan, and
Stowe Shoemaker

A hotel brands unique selling


proposition the argument it makes
to convince travelers to book its
hotels instead of someone elses
properties is known as its market
position. The position comprises the
bundle of attributes that the hotel
offers in an effort to meet guests
wants and needs.
Chekitan S. Dev, Ph.D. , is an
associate professor of strategic marketing
and Michael S. Morgan, Ph.D., is an
assistant professor of marketing at the
Cornell University School of Hotel
Administration. Stowe Shoemaker,
Ph.D., is an assistant professor at the
William F. Harrah College of Hotel
Administration at the University of
NevadaLas Vegas.
1995, C ornell University
A hotel brands position can be agents published in 1990, 1991, and hotel stay hom e to use.5 Hyatt H o
viewed from two perspectives, that 1992. tels, for example, positioned itself in
of the brands management and that the 1980s as operating hotels whose
of the guests. The brands manage Positioning dramatic architecture created an
m ent must have a firm concept of Each hotel booking represents a exciting hotel stay.
the hotels intended position, and its purchase decision that is based on Most of a hotels attributes are
promotional efforts must articulate the customers perception of the intangible, making it difficult for a
not only what the brand offers but attributes represented by that brand. customer to distinguish among com
how its offerings are distinct from In the case of corporate travel of petitive offerings.6 To enable cus
those of other brands. fices, the customer is the person tomers to make that distinction,
In the final analysis, however, a who makes the booking, regardless marketers attempt to establish a po
brands position is determ ined by its of who actually stays at the hotel. sition using brand names and specific
customers. A hotel company might Those attributes are both tangible images or slogans that signify some
offer a luxury-level package of ser (the physical property) and intan of the intangible attributes. Lewis
vices and amenities in an effort to gible (services offered).1 Typical suggested that a successful position
attract business travelers, for in attributes might include a low price, comprises three elements: it differ
stance. If the resulting room rate is convenient location, a frequent- entiates the brand; it locates the
higher than corporate travel manag traveler program, or a helpful and brand on specific benefit dimen
ers are willing to pay, that brand is courteous staff. The package of at sions, and it creates an image.7 Lewis
in reality not positioned for the bulk tributes offered by the brand consti continued: To combine these ele
o f business travelers. Instead it may tutes its market position, which is ments, the positioning statement
attract only those who are price usually viewed in relation to other should be designed to create an im
insensitive, or it may attract luxury- brands. Brands that have similar age reflecting the perception of the
oriented leisure guests. In another bundles of attributes are considered hotel that management wishes its
example, if a hotel has positioned to be in the same competitive set.2 target market to hold and reflecting
itself as the most effective and effi The part of the position that de promises on which the brand can
cient conference hotel in the mar rives directly from the products deliver and make good. The subtext
ket, customers will expect their physical attributes is its objective of this definition is that the key to a
meetings to occur flawlessly. Should position.3 The fact is that the Four hotels position is in how it is viewed
that not occur, the hotels posi Seasons offers the most services of by the customer.
tion from the customers point of any hotel brand, AmeriSuites offers a Through market research hote
view will in reality be an okay suite at a price often charged by liers can determine which attributes
conference hotel or worse. conventional m id-price competi travelers (or travel managers) con
Custom ers perceptions of a hotel tors,4 and M otel 6 offers consistent, sider in choosing a brand and how
brands position can be subdivided low-cost rooms. travelers view a hotel brand in light
into specific attributes that can, in The other portion of the position of those attributes.8 From that infor
turn, be depicted graphically on is subjective, involving peoples per mation, the researcher can apply
coordinate axes known as perceptual ceptions of a brand or individual discriminant analysis to develop a
maps. Likewise, the position of an propertys intangible attributes. map of the brands position as
individual hotel or brand can be These can only be experienced dur seen by its customers.9 In assessing
graphed, to allow a comparison of ing the hotel stay. As R obert Lewis
the brands position in relation to succinctly put it, you cannot take a 5 Lewis, p. 87.
6 See: John M. Rathmell, Marketing in the Service
those of competitors and to dem on Sector (Cambridge, MA: Winthrop, 1974).
strate any changes in the brands 1 See: G. Lynn Shostack, Breaking Free from 7 Robert C. Lewis, The Positioning Statement
position over time. In this article, Product Marketing Journal of Marketing, Vol. 41
(April 1977), pp. 73-80.
for Hotels, Cornell Hotel and Restaurant Adminis
tration Quarterly, Vol. 22, No. 1 (May 1981), p. 53.
we demonstrate how such a percep 2 Positioning by attribute is the most common 8 For example, see: Paul E. Green and Yoram
tual map can show the way a hotel but not the only strategy. See: David A. Aaker, Wind, N ew Ways to Measure Consumers
brands customers view the chain Positioning Your Product, Business Horizons,
May-June 1982, pp. 5662.
Judgments, Harvard Business Review, July-August
1975, pp. 107-115.
and, further, how that map can assist 3 Robert C. Lewis, Advertising Your H otels 9 For an explanation of discriminant analysis,
in determ ining a hotels competitive Position, Cornell Hotel and Restaurant Administra see: Robert C. Lewis, The Market Position:
set. The maps we discuss were con tion Quarterly, Vol. 31, No. 2 (August 1990), p. 85. Mapping Guests Perceptions o f Hotel Opera
4 Mark Harris, Economical Positioning, tions, Cornell Hotel and Restaurant Administration
structed using data drawn from sur Cornell Hotel and Restaurant Administration Quarterly, Vol. 26, No. 2 (August 1985),
veys of travel managers and travel Quarterly, Vol. 29, No. 2 (August 1988), p. 97. pp. 88-89.
those attributes, researchers must be Data for the study described in food, and price-value. See Exhibit 1
careful to distinguish the determ i this article were drawn from sum for the complete list of attributes
nant attributes (those that actually mary statistics published in the used to create perceptual maps for
cause a purchase) from salient at yearly U.S. Hotel Systems Survey the upscale segment. The attributes
tributes (those that are top-of-the- for 1989, 1990, and 1991 by Busi respondents used to rate the brands
mind but may not actually distin ness Travel News. The survey com varied for each segment simply be
guish the hotel). In terms of piles the views of corporate travel cause different attributes apply to
positioning, the distinction between managers and business travel agents each segment. The graph in Exhibit
determ inant and salient attributes opinions of the nations hotel brands 1 shows the relative importance of
might not be so keenly noticed, on a variety of attributes. each of the attributes for this
because both contribute to the view sample.
that a customer has of a given Unusual Situation The surveys sampling m ethod
brands position. It is possible, At the time our data were compiled remained consistent over the three-
however, to establish positioning the hotel industry was at the bottom year period. The magazines re
maps based solely on determ inant of its worst shakeout in at least two searchers mailed a questionnaire to
attributes.10 decades. In 1991 the U.S. hotel approximately 7,500 randomly se
industrys average occupancy lected subscribers who were busi
Business Travelers dropped to 60.8 percent, a 20-year ness travel managers and travel
Different classes of travelers use low.14 Moreover, many hotels were agents focusing on business ac
different attributes to determine in the red. An Arthur Andersen counts. O ne m onth after the first
their view of a hotel brands posi study revealed that U S. hotels in mailing, the questionnaire was sent
tion. Moreover, even when they use 1990 lost some $5.5 billion and again to nonrespondents. There was
the same attributes, various classes another $2.7 billion in 1991.15 no further followup. This m ethod
of travelers assign different weights Coopers and Lybrand estimated that ology obtained the following re
to those attributes. A principal point 60 percent of hotels were operating sponse percentages: 23 percent in
of differentiation among travelers is at a loss in m id-1992. Data from 1990, 21.4 percent in 1991, and
whether they are traveling on busi Smith Travel Research suggested 19.2 percent in 1992. The Business
ness or for pleasure.11 This study that increases in hotels A D R lagged Travel News researchers made no
concerns itself with hotel brands the consumer price index from effort to control for nonresponse
positions among business travelers. 1987 to 1991.16 It was well-known bias, and the findings represent only
As a proxy for the travelers them that the supply of new hotel rooms the opinions of those who answered
selves, we used data from corporate was vastly outstripping demand. the questionnaire. Moreover, sum
travel managers and travel agents Because this period represented a mary characteristics of those who
whose clients are chiefly business dynamic environment for the indus responded are unavailable. Conse
travelers. These travel planners are try, we chose it for our study. quently, any projections to the in
growing in importance as a distribu The hotel brands were divided a dustry at large should be made with
tion channel.12 At the time of our priori by Business Travel News into caution. Nevertheless, the data pro
study some observers estimated that five market segments: luxury, up vide a positioning map of several
these channels delivered 25 percent scale, m id-price, economy, and all chains based on the perceptions of
of all hotel-room reservations. That suite. Due to the num ber of hotel these travel managers and agents.17
percentage is higher for upscale brands under consideration, each Respondents rating each hotel
hotels than for mid-market and respondent rated hotel chains in brand were qualified in the follow
economy properties. only one or two segments. The ing way. They were asked whether
attributes used included ease of they had booked their clients into a
" Lewis (1985), p. 93.
arranging individual travel, timely property affiliated with a given ho
11 For a specific analysis o f the differences in commission payment, quality of tel brand in the previous 12 months.
attributes applied by business and pleasure A respondents attribute ratings for
travelers, see: R o b e rt CL Lewis, P redicting
M otel C h o ice:T h e Factors U nderlying Percep
13 Business Travel News, January 29, 1990,
pp. 3 6-4 1 ; January 28, 1991, pp. 1319; and
that brand were tabulated only if the
tion, Cornell Hotel and Restaurant Adm inistration January 27, 1992, pp. 15-18. respondent answered this question
Quarterly, Vol. 25, N o. 4 (February 1985), p. 91. 14 Pauline Yoshihashi, Flotel R ecovery W ill Be
12 See: Russell A. Bell, C orp o rate Travel- a Late A rrival, Wall Street Journal, July 27, 1992, 17 T he data used for this study w ere selected to
M anagem ent Trends, Cornell H otel and Restau p. B1. illustrate the perceptual-m apping m eth od and
rant Adm inistration Quarterly, Vol. 34, N o. 2 (April 13 Ibid. should n ot be used for strategic in terpretation o f
1993), pp. 30-39. u> Ibid. the upscale lodging m arket.
Exhibit 1
Relative importance of hotel attributes (this study):
Upscale tier, 1990-1992

A Quality of food
B Physical apperanace,
In-room amenities
C Helpful, courteous staff
D Facilities for non-resort meetings
E Overall price value
F Overall average rating,
Facilities for resort meetings
G Ease in arranging individual
travel
H Ease in arranging group travel

Timely commission payments

Frequent-traveler programs

Corporate discount programs

in the affirmative. The consequence brands in each tier in the data pub cally the changes in market position
of this m ethodology is that the lished in 1990 and then compared over time to determine the extent
sample size from brand to brand in those brands positions in 1991 and to which brands occupy the same
the same years survey shows consid 1992. Each analysis was conducted perceptual space.
erable variation. for 30 hotel brands (10 chains for We applied probabilistic multidi
As a final note on the data, the each of three years in each market mensional scaling (MDS) algorithms
ratings used were means for each segment). We also analyzed the po to derive the coordinates for the
hotel brand. We attempted to obtain sitions of the top two brands in each perceptual map.18 Multidimensional
the entire data set but it was not of the five tiers over the three years scaling is a m ethod of calculating
available. We had no way to deter (another 30-brand analysis). In similarities between objects on a set
mine the level of homogeneity for making the perceptual maps, how of attributes. The calculations result
the sample because variance esti ever, we excluded the luxury tier in coordinates that can be plotted
mates were not given. due to an insufficient num ber of on coordinate axes to form a map.
Analysis. O ur goal was to create respondents. The distances thus calculated give
perceptual maps showing the rela The outcome of our analysis was an indication of the extent to which
tive positions of the various brands perceptual maps that revealed how the respondents view brands as
against each other and to examine each brand was positioned relative similar.
any movement in a brands position to its competitors and how each
during the three years, as viewed by brands position changed over the 18 See: J.O. Ramsay, Some Statistical Approaches
the business travel managers and three years we studied. O ur goal to Multidimensional Scaling,'Journal of the Royal
Statistical Society, Series A,Vol. 145 (1982), pp.
agents. We analyzed the relative was more than simple description, 285-312; and M.L. Davison, Multidimensional
positions of the ten most-used however. We wanted to test statisti Scaling (New York: John W iley & Sons, 1983).
Exhibit 2
Relative market positions (this study):
Upscale tier, 1990

We obtained the MDS algo ties. The coordinates of a brands except if a chain intends to be one
rithms from the com puter program location on X and Y axes reflect place (with one particular com peti
Multiscale, described in the box underlying composites of attitudes tive set) and finds itself at some
on page 55.The algorithms found toward the brands among the survey other place. Perceptual maps can
in Multiscale require that some sort respondents. It is im portant to bear indicate how close one s brand is
of distance m atrix be applied. We in mind that the distances are in to competing brands. Brands that
used a dissimilarities matrix, created psychological space, measured in are positioned relatively far away
using the following Euclidean dis terms of customer perceptions and from each other on the map are
tance metric: preferences rather than on differ interpreted to be less directly com
P ences derived from more objective petitive, while hotel chains that have
<V= ^ <W 2 measures.19
It is also im portant to note that
nearby coordinates are considered to
be strongly competitive with each
k=1
the position maps are essentially other. The map also can identify
for chains i, j, and attributes k=1 p
value-neutral. That is, one spot on open space, which is interpreted to
the map does not inherently have to be an available market niche either
The distances d were then repre be better or worse than another, for repositioning existing operations
sented to the best extent possible on or for a new entrant.
a two-dimensional map. 19 The significance o f psychological positioning A frequent complaint about
Positions of the firms or brands is explored in: George Overstreet, Creating MDS is that the plotted points and
on the perceptual map can assist Value in Oversupplied Markets: The Case of
Charlottesville, Virginia, Hotels, Cornell Hotel
distances are derived purely
managers in identifying potential and Restaurant Administration Quarterly, Vol. 34, algorithmically, w ithout respect to
competitive threats and opportuni No. 5 (October 1993), pp. 84-91. the probability distribution of errors
Exhibit 3
Relative market position (this study):
Upscale tier, 1991 j
Meridien

in the space. We have applied an other. We can also tell whether a to another. Changes in perceptual
algorithm that conducts statistical movement by a brand from year to distances experienced by a brand
tests of significance to ensure the year is significant. The benefit of over time that are statistically signifi
points are, in fact, different. Such a using probabilistic scaling is that it cant we term direction, while
test alleviates the concerns raised by allows one to focus only on position changes that involve m otion that is
the following questions. If the dis differences that are statistically sig not statistically significant we term
tance between two points cannot be nificant. Such an approach clears drift.
perfectly reflected in a reduced two- much of the clutter surrounding
dimensional M DS map, how is the position differences. Cartography
error distributed? Moreover, how The outcome of the calculations Statistical tests allow us to examine
can one tell w hether two points are is a set of points on a map. The lo whether the points on the coordi
really different from one another in cation of each hotel brand is de nate axes shown in Exhibit 2 are at a
a statistically significant way? Even picted according to how customers significant distance from each other.
points that look different may con perceive them on the attribute (Note that Exhibits 2, 3, and 4 can
tain random error that makes them, dimensions in the graph in Exhibit be overlayed on Exhibit 1.) The
in reality, not different. 1. Although the brands are arrayed differences shown in two dimen
Because we have the ability to on coordinate axes, their positions sions may actually be larger in three
test for the significance of differ in relation to the axes (and at dimensions. The circles drawn
ences between points on the per tributes) themselves are less im por around the points on this map de
ceptual map, we can determine tant than their positions in relation pict clusters of points that are not at
which chains have positions that are to one another or the change in a statistically significant distances from
at significant distances from each brands own position from one year each other. So, for example, the
Exhibit 4
Relative market position (this study):
Upscale tier, 1992

Wyndham
Hotels

map of the 1990 data (collected in Changes com ing. The 1991 would never recover from the effects
1989) makes it appear that Stouffers data (collected in 1990) may reflect of war, overbuilding, and recession
position was considerably different the results of the severe recession (Exhibit 4). Ironically, the com peti
from that of M eridien.The statistical that began in 1990. This map (Ex tive clusters found in the 1992 data
tests showed otherwise, as indicated hibit 3) allows two levels of analysis. are similar to those in the baseline
by the circle around those two First, we can once again compare 1990 chart (Exhibit 2). Hilton, Wes
chains. Likewise, there was no sig the chains relative positions against tin, Sheraton, and Hyatt, remain
nificant difference in the perceived each other. We can also compare the fairly consistent. M arriott has moved
positions of W yndham and M eri positions of each chain in 1991 with substantially but is again viewed as
diem However, the distance between its 1990 position. Indeed, there was competitive with Hyatt, albeit not
Wyndham and Stouffer is significant. considerable movement in managers with Westin. Likewise, Radisson is
Viewed another way, the busi- and agents perceptions of the once again viewed as competitive
ness-travel managers and travel chains positions. For instance, M ar with Sheraton and Hilton.
agents in the 1990 survey viewed riott has m oved out of its form er
Hilton, Radisson, and Sheraton as competitive group with Hyatt and Chain Movement
competitive brands whose essential Westin to be more competitive with The perceptual maps give us an idea
positions were not particularly dis Hilton and Sheraton. It is interesting of how individual brands did or did
tinct from one another. Hyatt, M ar that none of those other four chains not attempt to change customers
riott, and Westin form ed another moved substantially from 1990 to perceptions of their positions. The
competitive group, with a position 1991. The movement of M eridien maps capture the movement of indi
significantly different from that of and W yndham was substantial. vidual brands from year to year
Hilton, Radisson, and Sheraton, but 1992 . The data published in 1992 based on customers perceptions of
not from each other. This map pro record the positions hotel brands differences among the chains, which
vides a baseline against which to held in the nightmare year of 1991, the attribute arrows help to illus
compare the other two. when it appeared that the industry trate. The decisions the companies
make to emphasize one or another
discriminating dimension shifts Basic points of probabilistic multidimensional scaling (Multiscale)
their position in the minds of their
customers. (1) Points are located in Euclidean space based on variable ratings (in this case
In the 1990 map, Stouffer is on based on perceptions of product attributes), and fitted to a two-dimensional perceptual
map. Interpoint distances are calculated.
par with Inter-Continental on price (2) The differences between true and fitted interpoint distances (errors) are compared
and product quality, but in 1991, using statistical tests of whether those distances are due to random chance or whether
customers price-value perception of they are statistically significant.
Stouffer moved it away from Inter (3) All distances are considered positive (absolute value). Statistical tests are based
on the assumption that variables have a normal (log-normal) distribution, as depicted in
Continentals competitive set, a the curve below.
movement that reversed in 1992 (4) Any extreme values (outliers) must be transformed. Before applying a Multiscale
following considerable advertising, fitting to these distances, the outliers must be smoothed out so that the final graph

acquisitions, and product upgrades. shows a more log-normal distribution.


(5) Finally, z-tests are applied to interpoint distances, testing whether those distances
M arriott moved downward on the are significant at the p<.05 level. M.S.M.
cost scale between 1990 and 1991.
The chain responded to the hotel
industrys recession (and its own each other, and all upscale hotels are Holidays out. Ram adas president
real-estate-driven difficulties) by not necessarily part of a given com Stephen Belmonte explained the
emphasizing the economic dim en petitive set. By developing a percep strategy as one of positioning R a
sion particularly its incentive pro tual map, marketing managers can mada close to Holiday Inn in the
grams. As examples, M arriott beefed determ ine which brands are actually customers mind, or, in other words,
up its frequent-guest and corporate- in the competitive set. to position Ramada with Holiday in
discount programs and courted M ore important, by maintaining the customers consideration set.20
travel agents and managers by guar the perceptual map over time, man The strategy was chosen, Belmonte
anteeing commission payments in 30 agers can assess whether changes in said, because Ramada was a sleepy
days. By 1992 that focus was soft the brands marketing strategies are and stagnant company with an
ened and the chain moved to com causing the hotels position to identity crisis, and was falling out
pete more with Hyatt and less with change. Changes in position should of favor as a mid-market brand.21
Hilton and Sheraton. For its part, be intentional and not accidental, According to Scott Deaver,
Hyatt maintained a fairly consistent lest a brand find itself competing in Ram adas vice president of market
position during the entire period. a set that puts it at a disadvantage. ing, the objective of the campaign
O n the other hand, intentional was for Ramada to be part of a
Managerial Implications changes in the competitive set can competitive pair with Holiday in
Managers should m onitor the impli make sense. M arriott s $49-room the same way that R eebok and
cations of their marketing strategies. program, for instance, substantially Nike, Burger King and M cDonalds,
They need to examine the attributes changed its position on the 1991 or M CI and AT&T are competitive
that customers use to differentiate map, compared to 1990 and 1992. pairs. In commenting on the results
one hotel brand from another, For that time, the brand moved out of the campaign, Deaver noted that
checking the dimensions on which of one competitive group and into there was no way of knowing
that position is based for both their another one. O ur data set does not w hether the campaign achieved its
own brand and their competitors. give an indication of intention, but objective of having Ramada consid
Ratings such as those by Business we may infer that M arriotts move ered with Holiday.22 Using the tech
Travel News can give marketing was a deliberate strategy. nique presented in this article, how
managers an indication of the effec W hile the technique in this ex ever, would help determine whether
tiveness over time of the brands ample is based on historical data, the that objective was achieved. CQ
marketing strategies in positioning lessons of how a hotels position
against the competition. moves as a result of operating or 20 Aaker, pp. 56-62; also see: Michael S.
Such an approach will prevent marketing changes intentional or Morgan, Travelers Choice: The Effects of
Advertising and Prior Stay, Cornell Hotel and
hoteliers from making the mistake of unintentional can be used for fu Restaurant Administration Quarterly, Vol. 32, No. 4
presuming a competitive set based ture strategic planning. In 1992 (December 1991), pp. 40-49.
only on physical attributes. Two Ramada launched an advertising 21 Phillip Swann, Raging Belmonte, Lodging,
Vol. 70, No. 10 (June 1992), pp. 28-29.
similar-appearing hotels may or may campaign with the following posi 22Jim Galb, Taking off the Gloves, A ST A
not actually compete directly against tioning statement: Ram adas in, Agency Management, August 1993, p. 95.

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